TELUS putting share exchange proposal to democratic shareholder vote

Proposal to require majority common and two thirds non-voting
shareholder approval

VANCOUVER, Aug. 21, 2012 /CNW/ - TELUS is putting a new proposal to
exchange its non-voting shares into common shares on a one-for-one
basis to a democratic vote of all its shareholders.

Holders of both TELUS non-voting and common shares are invited to vote
on the proposal at a meeting of shareholders planned for October 17,
2012 or online via the proxy voting system once the information
circular is distributed in advance of the meeting. Shareholders on
record as of September 4 will be entitled to vote at the meeting.
TELUS' proposal will require approval from its non-voting and common
shareholders, each voting separately as a class. In accordance with
applicable corporate law requirements, the TELUS proposal will require
approval from two-thirds of its non-voting share votes cast at the
meeting, as the non-voting shares are being exchanged for common
shares. As common shares will not see their legal rights change, TELUS
is seeking approval by a simple majority of common share votes cast at
the meeting.

"With this proposal we are responding to the overwhelmingly positive
support from shareholders since we introduced our first proposal to
convert non-voting shares into common shares in late February," said
Darren Entwistle, TELUS President and CEO. "Excluding Mason Capital,
proxies representing 92.4 per cent of total shares received were in
favour of our first proposal before we withdrew it in May. At that time
we pledged to introduce another proposal for a one-for-one exchange in
due course, and we are fulfilling that promise with today's
announcement."

"We strongly believe this proposal is fair to all shareholders, widely
supported by shareholders with a true economic stake in TELUS, and
consistent with the principles of good corporate governance," Mr.
Entwistle added.

Once approved, TELUS non-voting shares would be exchanged for common
shares on a one-for-one basis, making common shares TELUS' sole class
of issued and outstanding equity securities. TELUS currently has
approximately 175 million common shares and 151 million non-voting
shares issued and outstanding, so this would result in the enhanced
liquidity and marketability of a single class of approximately 326
million common shares. Upon approval, common shares will be listed on
the New York Stock Exchange (NYSE) for the first time.

Process
The required information for shareholders to consider this proposal and
to vote on the special resolution to approve the Arrangement will be
contained in an information circular mailed or distributed
electronically to common and non-voting shareholders in advance of the
meeting of shareholders. This information circular will also be
available at that time on the Company's website at telus.com/investors.

In addition to shareholder and court approvals for the transaction, the
listing of the new common shares to be issued pursuant to the
Arrangement is subject to approvals from the Toronto Stock Exchange
(TSX) and the NYSE. Provided those approvals are obtained, TELUS'
common shares would then trade on both the TSX and the NYSE.

A special committee of TELUS' Board of Directors has considered the
implications of this share exchange. Scotia Capital served as the
independent financial advisor to assist this committee in evaluating
the proposal. After careful review, Scotia Capital provided an opinion
that a one-for-one exchange ratio is fair, from a financial point of
view, to holders of both common shares and non-voting shares,
respectively.

After considering the recommendation of the special committee and Scotia
Capital, TELUS' Board of Directors unanimously concluded that the
Arrangement is in the best interests of TELUS and is reasonable and
fair to all shareholders. Accordingly, it is recommending that
shareholders approve the share exchange.

Shareholders with shares on loan under securities lending programs
should ensure that they recall their shares by the September 4 meeting
record date in order to vote.

Background
TELUS' dual class share structure was designed more than a decade ago
when TELUS' predecessor companies - BC TELECOM and TELUS Alberta -
merged. At the time, BC TELECOM had a majority non-Canadian shareholder
- GTE, now Verizon - and so the company created non-voting shares so
that the merged company would comply with federal telecommunications
legislation, which restricts foreign ownership to no more than 33.3 per
cent of voting shares. Verizon subsequently divested its shares in the
company, significantly reducing foreign ownership in the company.

Earlier this year in response to shareholder interest in the increased
liquidity and marketability that having just one common share class
would create, TELUS' Board of Directors formed a special committee
which asked independent financial advisor Scotia Capital to review a
share conversion proposal and advise whether and how to proceed. Scotia
recommended TELUS proceed with the conversion, and that a one-for-one
conversion ratio was fair for all shareholders and the best way to
proceed.

TELUS announced the share conversion proposal to shareholders on
February 21, and the trading value of both share classes immediately
increased - a key indication of widespread support from the holders of
both share classes. As of August 20, TELUS' common shares have
appreciated by 15 per cent since February 21, the non-voting shares by
17 per cent, despite the TSX index declining four per cent in the same
time period.

A number of corporate governance advocates have supported TELUS'
proposal as good corporate governance, including both leading
independent proxy advisory firms, ISS and Glass Lewis, which
recommended that both common and non-voting shareholders vote in favour
of the original one-for-one exchange proposal.

Following the proposal's publication, Mason Capital quietly acquired
approximately 19 per cent or approximately 33 million of TELUS common
shares, while simultaneously selling short nearly the same number of
non-voting and common shares. Mason was voting $1.9 billion worth of
TELUS common shares with only an estimated $25 million net economic
stake. Subsequently, Mason disclosed in July that its TELUS common
share position was just under 20 per cent. This discredited 'empty
voting' strategy gave Mason far more voting weight than its minimal
economic investment in the company should allow. Mason opposed the
proposal in an effort to profit from its short trades by widening the
spread between the trading price of the two share classes - an interest
at odds with other shareholders. Accordingly, TELUS withdrew the
proposal since the empty voting tactics of Mason and absence of
regulatory oversight of the practice made it apparent that a vote on
the proposal at TELUS' 2012 May Annual Meeting would not succeed.

Mason, which previously indicated it had a long-term interest in TELUS
and has subsequently backed away from that position, has continued to
make numerous attempts to widen the share price spread, which is
directly contrary to the interests of shareholders with a true economic
interest in the company.

Forward looking statement:
This news release contains statements about expected future events of
TELUS that are forward-looking. By their nature, forward-looking
statements require the Company to make assumptions and predictions and
are subject to inherent risks and uncertainties. There can be no
assurance that the share exchange proposal will receive voting approval
and, if not approved, the market price of non-voting shares and/or
common shares may decline given that share prices in both classes
increased on the announcement of the February proposal. In addition,
there can be no assurance that the final court order in respect of the
Arrangement will be granted. There is significant risk that the
forward-looking statements will not prove to be accurate. Readers are
cautioned not to place undue reliance on forward-looking statements as
a number of factors could cause actual future events to differ
materially from that expressed in the forward-looking statements.
Except as required by law, TELUS disclaims any intention or obligation
to update or revise forward-looking statements.

About TELUS
TELUS (TSX: T, T.A; NYSE: TU) is a leading national telecommunications
company in Canada, with $10.6 billion of annual revenue and
12.8 million customer connections including 7.4 million wireless
subscribers, 3.5 million wireline network access lines, 1.3 million
Internet subscribers and 595,000 TELUS TV customers. Led since 2000 by
President and CEO, Darren Entwistle, TELUS provides a wide range of
communications products and services including wireless, data, Internet
protocol (IP), voice, television, entertainment and video.

In support of our philosophy to give where we live, TELUS, our team
members and retirees have contributed more than $260 million to
charitable and not-for-profit organizations and volunteered 4.2 million
hours of service to local communities since 2000. Fourteen TELUS
Community Boards lead TELUS' local philanthropic initiatives. TELUS was
honoured to be named the most outstanding philanthropic corporation
globally for 2010 by the Association of Fundraising Professionals,
becoming the first Canadian company to receive this prestigious
international recognition.